Actually, the rule is to seek DOCUMENTATION of what the CEO/company claims.
Definitions of due diligence on the Web:
The process of checking the accuracy of information contained in a company public statement, such as a prospectus, before recommending that company to others. Is also the act of one company investigating another company before buying its shares. https://www.shareanalysis.com/asp/glossary.asp
The investigation and evaluation of a management team's characteristics, investment philosophy, and terms and conditions prior to committing capital to the fund. www.ventureeconomics.com/vec/glossary.html
The analysis and appraisal of a business in preparation for a flotation or venture capital investment. Investors have a right to expect that these investigations are carried out thoroughly. www.financingcp.org/glossary/glossary.html
A process of inspection that a venture capital or other private equity firm carries out before closing on a deal. Venture capitalists, for example, might review a company’s accounting practices and managerial structure. www.wrhambrecht.com/ind/private/glossary/
Good stocks are obvious. Extensive DD is how you convince yourself to buy a bad one.
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